Q2. The current stock price of Wildwood Corp. is S120. The company currently pays a dividend of $3 per share. Instantaneous risk free rate is 5% and the instantaneous standard deviation of Wildwood's stock returns is 30%. You want to purchase a put option on this stock with a strike price of $125 expiring 60 days from now. According to the Black-Scholes model, what should the put option cost? Answer: $8.33 In the above question, how many shares of Wildwood Corp should you hold per put option contract to hedge your risk? Q3. Answer: Delta--0.5948; hold 59.48 shares per put contract Q2. The current stock price of Wildwood Corp. is S120. The company currently pays a dividend of $3 per share. Instantaneous risk free rate is 5% and the instantaneous standard deviation of Wildwood's stock returns is 30%. You want to purchase a put option on this stock with a strike price of $125 expiring 60 days from now. According to the Black-Scholes model, what should the put option cost? Answer: $8.33 In the above question, how many shares of Wildwood Corp should you hold per put option contract to hedge your risk? Q3. Answer: Delta--0.5948; hold 59.48 shares per put contract